(Reuters) - Trucking firm Werner Enterprises Inc (WERN.O) said on Monday it expects to see better rates for the freight it carries in the coming quarters at a time of tight capacity in the U.S. trucking market and a strengthening economy.

But the Omaha, Nebraska-based company, among the largest carriers in the United States, warned of higher fuel prices and a persistent shortage of qualified drivers.

“Freight metrics are improving, and we have increasing confidence that contractual rates will strengthen over the next few quarters,” the company said in announcing better-than-expected quarterly profit.

The company said driver recruitment and retention remained a persistent challenge, as it is for other major U.S. truckload carriers as they compete to hire qualified drivers at a time of low unemployment.

Fuel costs were rising too. Diesel prices were 37 cents per gallon higher in fourth quarter 2017 than a year ago. The average diesel fuel price per gallon for most of January was up 44 cents from last year.

Werner also faces uncertainty as American, Canadian, and Mexican officials work to revamp the North American Free Trade Agreement, or NAFTA. Werner operates in several Canadian provinces to provide through-trailer service into and out of Mexico.

Shares in Werner, which have risen about 20 percent over the last 60 days, were flat in light after-market trade.

Werner said fourth-quarter freight demand was strong for its truckload services, or contracts for an entire trailer-load to a single customer, with much stronger-than-normal freight volumes so far in January.

The company also benefited from changes to U.S. tax law.

Its fourth-quarter and annual profits included a $110.5 million non-cash reduction in income tax expense and it said it estimates full-year 2018 effective income tax rate to be between 25 percent and 26 percent.

As a result of the new tax law, Werner said it expects net capital expenditures for 2018 will be in the range of $300 million to $350 million, which allows for increased investments in its tractor and trailer fleet.

Werner posted fourth-quarter net income of $141.13 million, or $1.94 per share, up from $21.81 million, or 30 cents per share a year earlier.

Excluding one-time items, earnings per share were 42 cents, while Wall Street analysts on average expected earnings per share of 38 cents.

Werner also beat expectations on revenue, which rose to $567.4 million from $518.8 million a year ago. Analysts on average expected revenue of $518.8 million.